tv Nightly Business Report PBS November 12, 2013 6:30pm-7:01pm PST
this is "nightly business report" with tyler mathisen and susie gharib brought to you in part by. >> thestreet.com, up to the minute stock market news and in depth analysis. our quant rating service provides objective independent ratings daily on over 4300 stocks. learn more at the street.com/nbr. clear for take off, american and u.s. airways settle anti-trust charges and will merge to become the world's largest airline. healthy, new guidelines from the american heart association on the use of stat tants.
will it be a game changer? >> happy holidays ahead? reports of earnings over the next couple weeks with a look at the strength of the consumer. that and more for "nightly business report" for tuesday, november 12th. good evening everyone. i'm sue herrera in for system susie gharib. >> i'm tyler mathisen. welcome. the world's biggest airline is about to take off, they settled anti trust charges planning a merger for american airlines and u.s. airways but not before resting concessions aimed as protecting the consumer and making sure the new airline won't be too big. shares of u.s. airways ended about 1% higher, shares of american airlines that began trading on exchange after bankruptcy shot up 26%. let's take a look at what the changes may be in store at the combined airlines and what it means for travelers and investors. >> reporter: with more than 6700
flight as day, the new american airlines will be the world's largest but both partners must pay a price. to get the 16 million dollar deal done and settle anti trust charges brought by the justice department, american and u.s. airways will give up, take off and landing slots and gates at seven congested big city airports such as boston, chicago, dallas, los angeles, miami, new york and washington d.c. some of the more noticeable changes will be in the nation's capital with a new american will operate 44 fewer departures a day than two partners currently have giving up 104 take off and landing slots. 16 of those slots will be offered to jetblue, the 88 others will be distributed to other airlines. at new york's laguardia, they will give up 44 take off and landing spots and five gates. bill bear of the doj's anti
trust division said the settlement will quote disrupt the cozy relationships among the legacy carriers, increase access to congested airports and provide consumers with more choices. why was the doj so wary of the merger? for one thing, it will be the fourth big merger in the past five years and once the deal closes next month, the nation's four largest airlines will control roughly 85% of all domestic airline seats. >> and joining us now to talk more about the airline industry is helane becker. good to see you, welcome. >> thank you very much for having me. >> let's start with who the big winner is for this, the larger carries because now they have access to new gates or the smaller carriers because they have access to new gates? >> well, of course, u.s. aways and american will have to sell the gates and they will go to the slots at laguardia and dca
specifically, so it will go to auction and the highest bidder will be the winner. you know, if southwest and jetblue which are operating some of the slots now, if they choose not to bid, others can. >> what will happen to fares? >> unbalanced, we've seen costs increase and that said -- as a result fares have gone up and that is likely because cost is going up. that's really the way to think about that. having said that, we expect that the slots and the gates that will be divested will encourage. jetblue is expanding in boston and we expect them to continue and obviously that will help
consumers in giving them choices. >> the airline industry mergers, we've seen so many. are there less out there that seem logical to you? >> right, i think not. i mean, that doesn't mean after a few years there won't be others. we've -- this is the second time in my career that i've seen major technology improvements in aircraft and a mayor consolidation. the last time we talked about the top ten airlines controlling, now we're seeing the top four. i don't think there is a lot left to consolidate. >> i was looking at a list of the best performing s&p 500 stocks and i believe delta is on it. is there any particular stock in this sector that you are more high on than others? >> well, i guess no pun intended there, right? the airlines have been really high flying stocks all year long. we really like delta. that's been a top pick of ours all year. we like united. that's been another.
spirit. we've been pretty over rate on the group all year long, primarily because we're encouraged by the fact that airlines are focused on returning and capital to shareholders and focused on limiting capacity group, limiting capital spending. so, you know, we're pretty optimistic about the group and we think technology improvements in the aircraft will be hugely beneficial and so will consolidation. we're looking at the industry being able to report profits in 2014, as well as 2013. >> all right. thank you so much for joining us tonight. helane becker -- >> thanks for having me. stocks ended mostly lower today but not by much with some blaming mixed messages from federal reserve officials. traders got spooked after one fed president said the central bank stimulus program can't go on forever. later another said he could see tapering begin in march and then a third fed bank president said that the central banks monetary easing plans should remain in
place. the dow backing away from month's record close. it was off 3 points. the nasdaq ended a fraction of a point higher and the s&p was down four. treasury prices under pressure today on fears about the fed tapering the stimulus program. the yield on the benchmark ten-year note fell slightly to finish at 2.77% and crude prices fell more than $2 a barrel closing at the lowest level since the end of may. >> well, despite today's dip, the dow is up more than 20% this year but ray, the founder of the hedge fund bridge water associates has a much more bleak outlook for the decade. if stock prices continue to rise, returns will head lower. >> i think over the next ten years, equities will have about a 4% return. as you lower the expect of return and do not lower the expected risk of equities,
increasing, there is a movement more to cash, as you have a greater appreciation in the price because of that, you have less wealth effect and each inextrament of wealth effect has less impact on spending. federal reserve will not be able to raise interest rates for a number of years. >> he advised investors to create a balance between stocks, bonds and cash on account of narrowing return rates on each investment. walmart wants a jump on this year's friday black friday shopping. they will open at 6:00 p.m., two hours earlier than last year and offering exclusive black friday deals at walmart.com, and those beginnerly on thanksgiving morning. >> and walmart is among some of the nation's biggest retailers reporting the latest quarterly earnings this week, and more importantly, giving investors their outlook on the all important holiday shopping
period. courtney region has more. >> reporter: with traffic down in shopping malls and lackluster sales and investors are wondering how much pressure the government shutdown and new health care laws are adding to consumer spending, and how much falling gas prices are helping. as a flurry of retailers report earnings in the coming days, wall street will find out. but while investors want to know how the back to school third quarter ultimately turned out, that's in the past. holiday hopes are hanging on those all important fourth quarter forecasts. >> we're very concerned what they will all say about the fourth quarter. we're not so concerned what they report in the third quarter, especially if they say something like it strengthened. >> reporter: first is macy's reporting earnings before the opening bell tomorrow. the department store disappointed last quarter, though, suggested the sales weakness is temporary. many believe the magic of ma sees will surface this weekend.
the largest retailer reports thursday and it will send ripple effects throughout the market. a lot is weighing whether the dow will post a third disappointing quarter. not everyone think walmart's outlook will set a pool in the stocking this holiday season. >> sale haves been good at walmart for the last three weeks. the last two weeks of october and first week of november. if that's true, i think they are likely to be less guarded on commentary. >> reporter: while walmart will set a tone they met up with closely watched and widely names reporting including best buy, home depot, j.c. penney or tjmaxx. still ahead, new guidelines from the heart organization could reshape how stat tents are used but what does this mean for
the drug company making them. p . a big set back for a medication aimed at treating heart disease. the drug failed in a trail for heart attacks, strokes or death twh added to patient's care which may include a cholesterol treatment, aspirin or blood pressure medications. shares of glaxo fell more than 1.5% today. new recommendations for americans at risk for serious medical conditions and statents.
hampton pearson has that story. >> reporter: they focus on the use on statents to lower the risk of heart attack, stroke and diabetes sgl diabetes. >> this is certainly a departure from guidelines where the focus was getting your cholesterol to goal and now the focus is on trying to get started on medication and take the highest dose that you can tolerate. >> reporter: the heart association and american college of cardiology identify four patient groups for whom taking stat tents lorer risk. those with bad cholesterol levels, patients with type two die bee bee ttees and patients a cardiovascular profile. >> the new recommendations really reaffirm the importance on treating cholesterol levels in the highest risk populations.
those with established heart disease, those with diabetes and those with genetic cholesterol problems. >> reporter: analysts say there is no question statents are the big gorilla, 214 million prescriptions a year, a 17% increase in the last five years. two of the biggest sellers, lipator has gone off patent. crestor go go off 2015. they say it won't offset the lost revenues from those expiring patents. >> at that point and the generic life cycle doesn't help generic firm. >> the next generation of patented stat tents is in the pipeline, meanwhile doctors emphasize drugs are no substitute for a heart healthy
lifestyle that include as good diet, exercise and a lot less stress where possible. for "nightly business report" i'm hampton pearson in washington here to talk about giepd lines is barbara a managing director with fti, you heard that package. do you think that's a need m mov mover. >> lipator and crestor and pfizer more increased attention and crestor but since their patents go off in 2016 their investors won't get too excited.
we have drugs coming from down the pipeline one in phase three, a novel target that could be given once for ze real weeks. i think the other message communicated earlier serves really been a movement from treat to goal and a focus on what the actual cholesterol number is, but rather the patients at high risk should be treated, number one, irrespective of their cholesterol levels and two that they should be treated aggressively with higher doses of statents, which i think those are the change here. >> and does that change the guidelines in your opinion for other chronic diseases like diabetes which is on the rise and the like or not? >> well, i think, you know, in some respects, i mean, keep in mind that the statants have been on the market and are safe but
this early and aggressive treatment and prevention, you know, with good healthy lifestyles is probably contributing to chronic diseases. >> do you have a feeling on the number of individuals will expand as a result of it? are we talking about a 20% expansion, 80% expansion? any guess? >> my guess would be you're talking 10 to 15% and that would come from the fact patients are targeted for treatment, sort of irrespective of what their cholesterol level is but rather as a function of their risk for card vascular disease and morbidities associated. >> the trend expanding rapidly towards wellness, general wellness and general well being and intervening in your lifestyle earlier in your life
so that you don't have some of these issues later on, or they aren't as extreme later on. >> i think it's a great point, sue, and i think it's absolutely true and will continue to be the case. one is, we as consumers will bear more of the burden of our health care so we'll have an economic incentive and health outcome incentive to do that. and the other is that i think, you know, the therapies and awareness and availability of better treatment regulimes earl on. cancer is becoming a chronic disease, rather than an acute life-threatening condition. >> barbara, thank you very much as always. >> thanks for having me. great to see you. >> likewise. >> barbara managing director at fti consulting. the largest u.s. home builder reported a big rise in sales and that's where we begin tonight's market focus.
d.r. horton profit increased 40%. the home builder benefitted from a pickup in home sales as mortgage rates eased a bit in october. the stock popped almost 5% to $18.91. dish network added more subscribers than wall street expected in the third quarter helping lift that stock. the satellite tv provider easily beat revenue estimates. the 35,000 new dish subscribers topped estimates, but the increase was well short of the 135,000 customers that it's rival direct tv tacked on. didn't seem to shake investors much today. the shock jumped 6% to $50.35. and jos. a. bank upped the third quarter outlook thanks to a rise in sales. they aren't set to report earnings until december but the positive outlook two days before the proposed take over bid will expire. shares rose 3.5%.
starbucks must pay kraft after the early termination of a grocery deal. starbucks has to pay about a half billion in interest and attorneys fees. the decision came after the closing bell prompting starbucks shares to go down just a bit. kraft shares popped and finished the trading day at $51.96. the activist investor dan low disclosed he has a stake in fed fedex. he said he met with fedex ceo and doesn't want to see him replace. it set them higher after it was down crowded this morning for lack of a mayor near term. it popped to $134.76. leap frog was up grated from a market perform to an out
perform. analysts sited the position in educational toys is the reason why the stock looks attractive to them. the report sent shares to $7.97. tablet sales are expected to be strong this year but tablet maker haves come under fire lately for targeting the devices to young kids who critics say are spending too much time in front of the screens. josh lipton has more. >> reporter: kids are using mobile devices including tablets a lot more. in the past two years, the average amount of time children eight years old and younger are spending on mobile devices tripped from 5 minutes a day to 15 minutes a day, according to common sense media and groups. stephanie says it's big business. >> the total toy industry is $20 billion and certainly electronics and entertainment properties are a growing percentage so i think it's viable to say this is about a billion-dollar market in the u.s. >> reporter: samsung is the
latest tech company moving into the market. the new galaxy tablet kids tablet is available in the u.s. and amazon, best buy and toys r us. it comes with a 7 inch display, the cost, $229. leap frog is also a player in the space with it's leap pad ultra designed for the 4-9-year-old set and has all the bells and whistle, 7 inch display, camera and mp 3 player and they can view sites approved. the cost $149. or v tech invo tab three. the american academy of pediatrics discourages screen time for kids under two, pediatricians i spoke to says it can impact development.
despite the concerns, there is no deny thing is a lucktive area for tech. for older kids, parents should be aware of the time their kids are spending in front of screens and limit screen time to just one to two hours per day. i'm josh lipton, "nightly business report", silicon valley. >> hope my kids were watching that report. coming up, mexico quickly becoming a major hub of auto manufacturing, but will it come at the cost of american jobs? a merger between urenex ex the exchange is come plait and
they will begin trading tomorrow, thus nlding tending t independent run of the new york stock exchange. it can be tramsed back to may of 1792. the president of the philippines says the death toll will likely be no more than 2500, far less than the previous estimate of 10,000. a risk assessment firm says total insured losses from that storm will be less than $100 million but to be clear that is just insured losses. damages to uninsured homes and businesses are expected to be far greater. with the new car sales in the u.s. climbing to their highest levels in six years, auto manufacturing has also revved up. auto plants in the u.s. are close to full capacity, so big auto makers are expanding and adding more assembly lines. not here in the u.s. but in mexico. phil lebeau has the story. >> reporter: it looks like any
other auto plant in the year but nissan's lines in mexico represent the latest surge in north america for the japanese auto maker. >> we're building a second plant, 175,000 cars a year. capable of doing four cars, mexico becoming the export hub for americas return nissan's expansion is one reason mexico passed canada and closing the gap with the u.s. for car production. >> mexico is proven for a long time and not just years but for a long time for us it's a fantastic world class quality operation. >> reporter: what's driving mexico's auto boom? the country's central location and numerous trade agreements allow auto companies to export from there to europe, even asia. auto makers make a fraction of the wage line workers make north
of the border. >> somebody in mexico might make 3 or $4 an hour. an out toe worker in ohio might be making five to eight times more than that. >> reporter: the brookings institute estimate half of the auto jobs will be in mexico by the end of this decade. that growth may limit the expansion and hiring at u.s. auto plants and another sign of surging mexican auto industry is impacting lives north and south of the boarder. phil lebeau, mexico. and for more on the rapidly growing auto manufacturing industry in mexico, head to our website, nbr.com. finally tonight, tuesday is not usually a popular day to say i do but today's calendar date is 11/12/13, a highly lly desi day. according to davids bridle, 800%
more than a year ago and next year maybe bigger, 12/13/14 will be the last calendar date this century with three sequence l numbers and that falls on a saturday. >> that will do it for "nightly business report", i'm sue herrera. >> i'm tyler mathisen, have a great night everyone and hope to see you back here tomorrow night. "nightly business report" has been brought to you by -- >> thestreet.com, up to the minute stock market news and in depth analysis. our quant rating service provides objective independent ratings daily on over 4300 stocks, learn more at the street.com/nbr.
if you sit still, especially in technology, the ramifications are disastrous. >> people who tour these galleries often say, wow, i had no idea. many think it's about scientist, engineers, and mathematicians. but if you ever texted, e-mailed, shopped online or friended someone, you know computing is all about you. and computing is all about change. computer companies are born, bought, sold and, yes, shutdown at an amazing rate.